Bank of America to resume foreclosure sales in judicial states during 1Q

Bank of America (BAC) said in its financial supplement Friday it resumed foreclosure sales in most states that have a nonjudicial process, but the bank won’t restart sales in judicial states until sometime in the first quarter. The bank reported a loss of $1.2 billion for the fourth quarter, with more than $3.5 billion in litigation and loss mitigation expenses. In October, BofA and other major lenders suspended foreclosures nationwide when employees were found to be signing affidavits without properly reviewing the documentation as required by law in 23 states. REO agents, those selling the foreclosed properties, were told to halt sales until the bank could correct the documentation. By the end of October, BofA said it was resubmitting affidavits in the 23 judicial states. Now, it is planning to restart the sales of these foreclosed properties. BofA said it is “maintaining a deliberate and phased approach” to the restarts and added that a “review of our foreclosure process shows the basis of our decisions has been accurate.” The banking giant has begun to reduce its portfolio of foreclosed properties. BofA REO totaled $1.9 billion in the fourth quarter, down 13% from the year before. However, the amount of delinquent loans is on the rise. Total loans past due by 90 days reached more than $22.3 billion in the fourth quarter, including $16.7 billion insured by the Federal Housing Administration. That’s up 32% from a year ago. BofA said of the foreclosures it conducted in the fourth quarter, 78% of the borrowers had not made a mortgage payment for more than one year. The loans averaged 19 months in delinquency. More than half of the borrowers either lost their job or had their income reduced. Write to Jon Prior. Follow him on Twitter: @JonAPrior